Amazon is already heating up Charlotte's grocery competition

29 August, 2017

Whole Foods employees in Seattle work late Sunday to prepare for price drops and other changes as the Amazon acquisition closes Monday.

In a sign of how the retailer is changing, the Amazon Echo, a voice-activated electronic assistant, was also for sale, for $US99.99 ($125.50) - a sharp pivot into electronics for a company known for kale and quinoa.

Wal-Mart, the world's biggest retailer, has already invested billions into lowering prices across the board over the past year or so, and has revamped the produce section at its U.S. stores, improving sight lines, adding more fresh-cut fruits and even creating a sweeter bespoke cantaloupe.

"Even if Whole Foods is just getting down to parity on price, they might be able to capture a little bit of market share", said Joseph Feldman, senior managing director at Telsey Advisory Group.

Whole Foods Market will be offering lower prices on a selection of best-selling grocery staples across its stores including both of its two stores in Pasadena starting Monday, as online retailer Amazon completes its acquisition of the company.

While it's not clear how deep the cuts will be - or how long they'll last - analysts said Amazon is likely trying to expand Whole Foods' reach beyond its typically affluent customer base.

But Whole Foods is a different story, because Whole Foods is a different business model, with revenue growth plateauing and net income falling, which has all impacted gross margins and operating margins.

Organic fuji apples and bananas were among the most heavily discounted foods.

Helping Whole Foods win back customers who found "good enough" organic and natural products elsewhere - possibly at a lower cost - fits Amazon's track record of keeping prices low to lock in customer loyalty. Amazon will also place its Amazon Lockers package pickup machines in some Whole Foods stores, and make Whole Foods' private label products available on its website, on AmazonFresh, on Prime Pantry, and Prime Now. Discounts on rotisseries chickens - which weren't yet on display at 8 am ET - ranged from 11 percent to 29 percent. Amazon is an expert in using data on past purchases and browsing to offer suggestions that might make people buy more, and could start applying that in stores as well as online.

"Amazon can come in and price items very low", he said. "Hopefully they'll get more items". Whole Foods later pulled the beverage and said it was prepared incorrectly.

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